Real Estate's Quarter Turns to Quicksand
Editor's note: As a special feature for April, TheStreet.com is offering a series reviewing the first-quarter performance of mutual funds and ETFs. This is the sixth installment.
If there is one thing Superman's arch villain Lex Luthor obsesses about more than the man of steel, it's real estate. In the 1978 Superman movie, Luthor attempted to turn his worthless inland California plots into rich beachfront property by blowing up the coast.
That's a bit extreme, but the point is that world population is growing, everyone needs a place to call home, and land is a limited commodity.
Add to that the worldwide sourcing of goods in an expanding world economy and it is not surprising that nine of the top 10 performers for the first quarter specify either an international or a global focus for their selection of real estate investments.Here in the U.S., the big story in real estate this quarter was the homebuilders. New-home sales plummeted 15.8% from December to January and another 3.9% in February, according to the U.S. Department of Commerce. Sales of existing homes have held up pretty well due to sellers' willingness to drop their prices. Since its peak in July 2006, the median U.S. home price has fallen 7.6%. This undercuts the efforts of new-home builders to sell their stock of homes and limits new-home building projects. Combining the superior global returns with the dreadful performance of the U.S. homebuilders and other domestic funds resulted in an average total return of 2.02% for the first quarter for the real estate funds we track. (RIT) LMP Real Estate Income Fund (RIT) and (JIRAX) JPMorgan International Realty Fund (JIRAX) had extraordinary first quarter total returns of 16.23% and 9.31%, respectively. (EIIPX) EII International Property Fund (EIIPX) scored big with a return of 8.24% by investing in countries outside the U.S., including 26.6% U.K., 16.5% Hong Kong, 12.6% France, 12.1% Japan and 10.0% Italy. The assets were allocated to 63.8% real estate, 26.8% REITs, 4.9% lodging and 2.6% homebuilders.
|Top-Performing Real Estate Funds|
|Fund||Ticker||Rating||Fund Type||Q1 Total Return|
|LMP Real Estate Income Fund Inc||RIT||B||Closed-End||16.23%|
|JPMorgan International Realty Fund||JIRAX||U||Open-End||9.31%|
|EII International Property Fund||EIIPX||U||Open-End||8.24%|
|Alpine International Real Estate Equity Fund||EGLRX||A+||Open-End||7.76%|
|Morgan Stanley Inst Global Real Estate Portfolio||MRLAX||U||Open-End||7.70%|
|SPDR DJ Wilshire International Real Estate ETF||RWX||U||ETF||7.40%|
|Dryden Global Real Estate Fund||PURAX||B+||Open-End||7.18%|
|Cohen & Steers International Realty Fund||IRFAX||U||Open-End||6.87%|
|AIM Global Real Estate Fund||AGREX||U||Open-End||6.13%|
|ING Global Real Estate Portfolio||IRGIX||U||Open-End||5.66%|
|iShares Dow Jones U.S. Home Construction Woes*|
|Homebuilder (Ticker)||Q1 Return||Rating||Fund Type||Q1 Total Return|
|Technical Olympic USA Inc (TOA)||-60.77%||B||Closed-End||16.23%|
|Beazer Homes USA Inc (BZH)||-38.07%||U||Open-End||9.31%|
|Meritage Homes Corp (MTH)||-32.69%||U||Open-End||8.24%|
|M/I Homes Inc (MHO)||-30.42%||A+||Open-End||7.76%|
|Hovnanian Enterprises Inc (HOV)||-25.78%||U||Open-End||7.70%|
|Centex Corp (CTX)||-25.69%||U||ETF||7.40%|
|Levitt Corp (LEV)||-23.83%||B+||Open-End||7.18%|
|Ryland Group Inc (RYL)||-22.58%||U||Open-End||6.13%|
|Standard-Pacific Corp (SPF)||-21.99%||U||Open-End||5.66%|
|Pulte Homes Inc (PHM)||-20.00%||B+||Open-End||5.61%|
|*Stocks held by iShares Dow Jones U.S Home Construction losing 20% or more for the first quarter of 2007
|Worst-Performing Real Estate Funds|
|Fund||Ticker||Rating||Fund Type||Q1 Total Return|
|iShares DJ US Home Construction Index Fund||ITB||U||ETF||-19.25%|
|SPDR S&P Homebuilders ETF||XHB||E-||ETF||-12.71%|
|ING Clarion Real Estate Income Fund||IIA||B||Closed-End||-9.12%|
|RMR Preferred Dividend Fund||RDR||E||Closed-End||-8.73%|
|Cohen & Steers Advantage Income Realty Fund Inc||RLF||B||Closed-End||-6.44%|
|Fidelity Select Home Finance Portfolio||FSVLX||E-||Open-End||-6.19%|
|Cohen & Steers Worldwide Realty Income Fund Inc||RWF||B||Closed-End||-4.74%|
|Cohen & Steers Total Return Realty Fund Inc||RFI||C||Closed-End||-4.39%|
|Nuveen Real Estate Income Fund||JRS||B||Closed-End||-3.68%|
|Cohen & Steers Premium Income Realty Fund Inc||RPF||B||Closed-End||-3.49%|
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